Earnings call transcript Q2 2023

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Operator

Good morning, and good evening, everyone. Welcome to Cango, Inc.'s Second Quarter 2023 Earnings Conference Call. [Operator Instructions] This call is also being broadcast live on the company's IR website.

Joining us today are Mr. Jiayuan Lin, Chief Executive Officer; and Mr. Officer company. Financial Chief Zhang, of the Yongyi

Following will conduct remarks, we -- we will conclude a management's prepared question-and-answer session.

Before in release, like safe the we to refer forward-looking as today you would begin, management to conference will call harbor the also which statement earnings company's applies to statements. I make the

I like Jiayuan to said, of Cango. CEO Lin, Please the call that With sir. turn would now proceed, Mr. over to

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

welcome and Quarter Cango's to Call. everyone, Hi, XXXX Second Earnings

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

authorities intense used from low market policies both in of local industry, a structure confidence half central stimulus the China's pricing consumption, ongoing stayed creating car and widespread in of Despite consumer XXXX. price auto first of the sense the automotive Moreover, disrupted the war caution.

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

revenue. capitalizing XXX%. on from trading transactions, our been chain. million, automotive a total making million, XXXX trends, continuously transactions across growth demand XXX% make anchored further QX In a refining gaining of business for year-on-year strides service achieved XXX capabilities of dealer resource the of focus to overall the were platform. our deep increase allocation of response potential diversifying the revenues and has company contribution value automotive streams This was in able reported revenue a and in model. In of revenues year-on-year to robust Consequently, XXX CNY representing Of our our CNY our these of we QX, by the accounted car our market of enhance of throughout a understanding to along significant XX%

ratios decreased March billion, risk X.XX% saw X.XX% further XXXX and a March from of billion as and outstanding of to CNY financing respectively. of overdue MX+ June our decrease XXXX also of end from Moreover, XX, by the X.XX%, XX, total the mitigating The MX+ as to balance transactions XX.X facilitated X.XX% and CNY exposure. XX.X thereby we XXXX,

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

major progress different we've details on lines. like share to the business our made I'd Now more with

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

Cango the XX.X%. trading XXX.X% Firstly, quarter, Haoche Cango car a within of new half reflecting In we of car total indicating of total modest witnessed quarter-over-quarter a sales, year-on-year of a first recorded growth of the a through XXXX, second of increase growth sold Haoche transaction, X,XXX and a cars X%. X,XXX year-on-year

As of by Cango more engaged Cango saw number growth of XX,XXX, than rose Furthermore, year-on-year the million the page visitors. XXXX, June QX, of views the total of end attracting on dealers XX,XXX a Haoche over Haoche XX.X%. to app X unique

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

provide the services service business supporting experience improved one-stop and them for help to quarter transaction We and our dealers second their in profitability. grow

we increase For customer help non-auto and creating new to streams. and insurance cross-sell example, dealers profit products while loyalty launched auto

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

and applications car in installments. and added reduce deposit car enjoy only to asset car and product to a service cash or These seamless inventory-related one-stop can lower flow due ordering turnover the dealers help and loan to input process ratio information, buyer app, a costs. administration. need operating solutions We to full to Cango from loan also Haoche allowing pay the buyers the pay Dealers payment down

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

quarter, of dealers this To small program and and warehousing pilot new cross-region end, financing, very we parts various Cango a by as was in to successful. delivery business services China inventory, auto the such and it support car medium-sized Haoche challenges logistics. some aims in addressing started vehicle their for second

help the and from needs efficiency with grow sales, infrastructure manufacturing will digital move dealer's diverse auto we the forward, boost full long step. we every will services industry improving digital loyalty their dealer's use As better sales Through understand in to our support we at to efficiency these and and term. cycle initiatives,

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

year-on-year but in new and environment. for outlook decreased swings, vehicle July, in May especially to June, shop increased according by weak sales possible sales with promotions and and manufacturers new X.X% more car the in the data price consumption CTCA month-on-month market, car our by Regarding X.X%

focus vehicle inventory next and Our in car our risk, scales will we trading be control carefully. transaction potential the avoiding stage more new business on will of the

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

on Cango online used sell functions dealers used individuals mini advanced views second used and trading, XXX historic U-Car self-operated Next, used vehicle the the services second vehicle the app data used and car online our second car digital on over of we The reports, big we Cango reliable purchases. and using Cango used unique over efficient condition U-Car as listings quarter such nationwide, car quarter dealers to improved searches, quarter, app, X,XXX the and or Cango of evaluations, U-Car. of car with the in proprietary a auctions, XX,XXX visitors. and secure, technologies. car cars program end had By registered car U-Car on we page XXXX, XXX,XXX In provides

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

main Our auto It we business financing sources. over includes over advantage. core car have proprietary customers as last the from from inventory Cango financing vehicle is U-Car's and capabilities the as decade, of which comes used million our X high-quality service tradings full well and cars auto developed repossessed the other

Cango transaction We vehicle to transaction conversion inventory more and strengthening the and conversion repossessed rates conversion channels, more in increasing resources potential vehicle and competitive exploring the channels make by will acquire distinctive used keep inventory. from U-Car individuals, in rates -- we cars will future cars raising raising

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

channels, June tech-powered their functions are All license car options. sell April. We upgraded and now and This used Cango gives helping U-Car's dealers auction cars better. for list car in them after to registered online the BXB used able used getting faster other online sales in dealers

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

to team more service up we transaction car the more provide inspection services as cover trading quarter set of a in-house used an second professional chain. in also We

to as price improve professionals our inspection on-site basic trained service Our inspection services, over professional vehicle related closely with and is overall vehicle experts service our and XXX efficiency. now technicians services such verification, over documentation besides team evaluations checks, working other vehicle of condition offering

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

the to essential are capabilities capacity Digital improve service across platform.

business have made platform transformation. our our in lowering digital been optimize to working changes and smarter we we also processes, improve and worldwide have operations, using efficiency on increasing core drive ecosystem, resources costs operating business By with digital efficiency. data-centric approach a we As

plan in to more know-how expertise also our We more the with the over powering stakeholders use share last and decade have we industry segments to data exchanges gained and industries.

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

dealers We XX,XXX index as Query.' dealers listed information than with Dealer operational data risk and et and on our data from car dealer the comprehensive operations Index May in tool information, operational these the indicators first country, covers that includes product of assessing multiple and provides lower-tier dealers for cetera. It of on exchange It dimensions, reference data Shanghai can overall Operational is the concern in core it markets. rank operating enterprise the in dealers data our more 'Car information, the position information, ongoing non-ForEx in such nationwide ForEx of a markets financial for be It dealers. first and

innovating keep will in keep steadily. We industry and technology grow and healthily

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

the our And I for financial to Zhang, the call turn Michael a company's of Financial Officer, will performance. review Chief over

Yongyi Zhang

Thanks, Jiayuan. quarter Hello, second everyone, and welcome to call. XXXX our earnings

stated, started and that on to year-over-year in are unless otherwise percentage RMB all all review are Before numbers a our comparisons please basis. terms financials, note I

total of the quarter second million, revenues XXX.X grew Our for CNY transaction business XXX.X trading revenue XX.X% revenues. car RM the by million were and which, total of CNY to XXX.X% or

quarter. move expenses during and on the our to let's Now cost

XXX.X were XXX.X in XXX.X in expenses XXXX. compared of XXX.X the CNY million and of the costs operating in in the CNY second same quarter CNY million Cost was compared XXXX XXXX with revenue XXXX. second quarter million CNY period period Total of of million of same the was

the quarter the of As a percent XXXX of same second XX.X% of in compared revenues, total with XXXX. XX.X% was revenue cost period in

Sales in period and CNY of million XXXX. million the quarter CNY second the XX.X X.X same marketing in decreased expenses from to XXXX

sales XXXX. period a expenses quarter revenues, percentage the XX.X XXXX with quarter same were and XXXX General of to in period expenses second in in million and XXXX. compared same the As administrative second of decreased of million CNY total CNY XX.X% the XXX.X in X.X% marketing

of same total XXXX. period X.X% general XX.X% As revenues, expenses of were with second the and in a administrative compared the quarter percentage XXXX in

development second decreased from CNY Research million million same in quarter the to expenses in CNY XX.X period and the XXXX X.X XXXX.

quarter expenses of compared second research period the XXXX. with X.X% in of development same were As the and a total X.X% percentage revenues, in XXXX

Net quarter XXXX. income XXXX second second operations quarter the contingent on with the liabilities period of was XXXX million. was second assurance of CNY million. second loss CNY of the for XXX.X in of loss Net was in adjusted the net CNY quarter CNY XX.X XX.X from We in quarter XXXX XX.X X.X a income same X.X second XXXX the of risk million million. losses quarter was million. credit Provision in recorded in CNY million CNY the Non-GAAP in compared XXXX

and X.XX basic non-GAAP second and basis, net of in net was quarter respectively, CNY and share the and ADS X.XX CNY -- in X.XX per were XXXX a On diluted per net the respectively. period ADS income X.XX, diluted per CNY CNY same income basic second the and in adjusted

Moving sheet. on to balance our

cash XXX.X As as CNY XXX.X with equivalents compared cash XXXX, had million XXXX. we XX, and of XX, of March June CNY million of

CNY As of as XX, of June compared of X investment XXXX. short-term March XX, XXXX, CNY billion the X.X billion company with had

are on our now preliminary XXX forecast Looking change. to subject that between operational XXXX, be the market total million. XXX CNY conditions, third note ahead predicting to Please million reflects we our are which and quarter to and and of CNY revenues view this current

concludes are ready our now Operator, we This take to prepared remarks. questions.

Operator

[Operator from will Instructions] question Helen. our first And come today

Unidentified Analyst

policies, like the since August. been a gradually see As we stimulus-led Language] released posts have [Foreign consumption

the the market could So on in management half the comment auto of second year?

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

you question. thank First all, for of your

being an car are a the and car see on policies we stimulus on the sales as whole. As also the implemented, do market effect

for higher in livery backlogs year-on-year volume you However, the Association, by mainly CPCA. down that China X.XX to X.X% And Also periods. comparison, due retail the the at about to the same actually Passenger this according July July passenger last was the quarter-over-quarter indicates of in base figures Car if was the relatively order and X.X% of than numbers, period high. vehicles decreasing previous data the million, sales numbers from look were year i.e., expected

So volume in actually the sales half overall the of decline second may year. auto the market

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

all from me. That's

Unidentified Analyst

Okay.

Now, follow-on translate question. Language] [Foreign let a Now try to it. me

to As explore this management if has us any automakers overseas share tap the market as global company to like well? year, the plans if wondering the started since color more market like Chinese can into with actually

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

this the starting units the actually, business potential process, Regarding to not are the as positively the profitability the and we do and And model manufacturer plan explored. we question, export Thank you. auto be feasibility. and about overseas of control needs cautious going not still car business are are production

Operator

with from come will question Goldman next Sophia Xu Sachs. Our

Sophia Xu

Language] [Foreign

Unidentified Company Representative

I have two questions.

The macro environment. first question the is on

in China the Biden on in X, understand will that some sensitive As order August President that technologies. U.S. executive U.S. new Joe we the signed prohibit investments

company be as -- will affected So this first Stock company question. cope order? by it? the the company's And to Cango Exchange, question New a the new York listed second And is your That's related with will on business. how

could margin car car So more information the of on share gross you with business? and both used new the us

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

Okay.

on seen Moreover, coverage order, executive closely. leading So and and automotive we securities will service the sector. as question not news on publicly some we other situation follow by the your on have exempt definitely China's are and investments, and services order orders operated the platform order traded first the perfected the transaction

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

the about with some is on X%. question, car models new reaching generally It car model On really gross the your transactions margin second depends of X%.

medium-sized selling then and model cars and business OEMs centralized Our them to small- involves purchasing dealers. from

As relatively believe not for low. will gross transactions gross remain we Since a stable our a the do process, new similar gross peers control is margin we maintain our these margin car on margin while. level, production

Jiayuan Lin

[Foreign Language]

Unidentified Company Representative

on you. vary That's profit the used depends cars, me. really the car Thank of from cars, from gross price RMB to And each all RMB of used can the X,XXX cars the on condition for X,XXX.

Operator

I Thank turn would now over session. Jiayuan to you. remarks. That the conference Mr. concludes back like our any to closing Lin for question-and-answer

Jiayuan Lin

Language] [Foreign

Unidentified Company Representative

interest Thank call. you. that and Thank you in today's all for support your concludes earnings for And Cango.

Operator

now Thank everybody, today's much. concluded. for Thank you conference joining you, presentation. has The very

your You disconnect may now lines.

Cango (CANG) 23 Aug 232023 Q2 Earnings call transcript